Another Message Board
Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I’ve moved my irregular email news from Mailchimp to Substack. You can read it here. You can also follow me on Twitter @JohnQuiggin
I’m also trying out Substack as a blogging platform. For the moment, I’ll post both at this blog and on Substack.
John Quiggin 
Wasted SMR’s & “The first net zero energy crisis…”
Waste “for which SMRs provide no benefit” – “more than five times the spent fuel per unit of power, and as much as 35 times for other forms of waste.” “Nuclear waste from small modular reactors” below.
“It is not true that we have a solution to nuclear waste” says Dieter Helm, in a crushing and blunt assessment of renewables.
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“The first net zero energy crisis – someone has to pay”
Dieter Helm
http://www.dieterhelm.co.uk/energy/energy/the-first-net-zero-energy-crisis-someone-has-to-pay-2/
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“Smaller Reactors May Still Have a Big Nuclear Waste Problem
…
“… sponsored reportestimated in 2014 that the US nuclear industry would produce 94 percent less fuel waste if big, old reactors were replaced with new smaller ones.
“Krall was skeptical about that last part. “SMRs are generally being marketed as a solution—that maybe you don’t need a geological repository for them,” she says. So as a postdoc at Stanford, she and two prominent nuclear experts started digging through the patents, research papers, and license applications of two dozen proposed reactor designs, none of which have been built so far. Thousands of pages of redacted documents, a few public records requests, and a vast appendix full of calculations later, Krall, who is now a scientist with Sweden’s nuclear waste company, got an answer: By many measures, the SMR designs produce not less, but potentially much more waste: more than five times the spent fuel per unit of power, and as much as 35 times for other forms of waste. The research was published in the Proceedings of the National Academy of Sciences earlier this week.
…
https://www.wired.com/story/smaller-reactors-may-still-have-a-big-nuclear-waste-problem/
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“Nuclear waste from small modular reactors”
Lindsay M. Krall
Allison M. Macfarlane
Rodney C. Ewing
Abstract
“Small modular reactors (SMRs; i.e., nuclear reactors that produce <300 MWelec each) have garnered attention because of claims of inherent safety features and reduced cost. However, remarkably few studies have analyzed the management and disposal of their nuclear waste streams. Here, we compare three distinct SMR designs to an 1,100-MWelec pressurized water reactor in terms of the energy-equivalent volume, (radio-)chemistry, decay heat, and fissile isotope composition of (notional) high-, intermediate-, and low-level waste streams. Results reveal that water-, molten salt–, and sodium-cooled SMR designs will increase the volume of nuclear waste in need of management and disposal by factors of 2 to 30. The excess waste volume is attributed to the use of neutron reflectors and/or of chemically reactive fuels and coolants in SMR designs. That said, volume is not the most important evaluation metric; rather, geologic repository performance is driven by the decay heat power and the (radio-)chemistry of spent nuclear fuel, for which SMRs provide no benefit. SMRs will not reduce the generation of geochemically mobile 129I, 99Tc, and79Se fission products, which are important dose contributors for most repository designs. In addition, SMR spent fuel will contain relatively high concentrations of fissile nuclides, which will demand novel approaches to evaluating criticality during storage and disposal. Since waste stream properties are influenced by neutron leakage, a basic physical process that is enhanced in small reactor cores, SMRs will exacerbate the challenges of nuclear waste management and disposal."
https://www.pnas.org/doi/10.1073/pnas.2111833119
The American press are getting stuck into the former head of the Federal Reserve (Dr. Yellen, see below) and the Australian media are criticising the RBA for failing to predict the current inflationary surge. Inflation is now 8.6% in the US and 7.8% in Europe. Its lower in Australia at 5.1% but imported inflation will soon increase that.
I think there are two main reasons for the forecasting errors. One is that the phenomenally high monetary growth figures of recent years have generally NOT been associated with inflation. Economists have wrongly supposed inflation would arise in the past but it just didn’t. Things have changed of course with the massive stimuli offered during and post-Covid restrictions that has created close to full employment and various supply-chain disruptions. Only a few economists (Lawrence Summers was one, Greg Mankiw another) correctly forecast that the US stimulus package was far too expansionary.
The other reason is that we have forgotten our history and have ignored the terrible costs of inflation inflicted on our societies in the 1970s and 1980s when inflation took off, requiring drastic monetary restrictions with high unemployment and lots of bankruptcies to bring it down. Suggested problems of a wage-price spiral emerging from the current minimum wage policy in Australia are dismissed with the observation that wages didn’t drive inflation in the past. A strange claim as there was negligible wage growth in the past and negligible inflation so the past is irrelevant.
A popular view is that concern about inflation is a bit like concern about public debt – only delusional right wing economists worry about such things. I think we should be concerned with both levels of public debt and with emerging inflation. We want lower debt to survive the next crisis whatever it is and we don’t want high inflation since we don’t want the stringent monetary policy that will increase interest rates more than they inevitably must.
https://www.theatlantic.com/ideas/archive/2022/06/what-is-causing-inflation-janet-yellen-jerome-powell/661237/
We set a very bad precedent by giving up on infectious disease control for COVID-19. Now, elites and red-necks are not willing to control anything. Letting all infectious diseases run rampant through the whole world, except China, has become the new normal. Easy to predict this will end very badly.
Global monkey-pox now growing exponentially over most of the globe. None of this will end until we start doing infectious disease control again. One of the causes is that Covid-19 is now leaving so many people with weakened immune systems that they cannot fight off other disease. Covid-19 appears to be producing autoimmune deficiency and not real immunity apart from short-term, waning antibody immunity. (Next post about that).
“We are all doomed” isn’t a particularly novel concept and surprisingly, given it’s compelling universality, most people seem to somehow get by.
I find it hard sometimes to tell if people are using the argument from incredulity or the argument from indifference. Outcomes seem the same.
Remember hydroxychloroquine? I’d forgotten, or more precisely down ranked hydroxychloroquine expected utility so far it doesn’t trigger a memory when reading Covid statistics anymore.
Nov 2020 – “Among U.S. major media outlets, stories discussing President Donald Trump and hydroxychloroquine are more numerous than all stories combined that cover companies and individual researchers working on COVID-19 vaccines.” Wow.
Yet it does highlight how bad “news”, in particular news US ‘news’ (more like a propaganda business than public service ala Fox & Sky etc) is able to promote propaganda vs knowledge. Pure amygdala trigger, fear targetting, click to profit, boost bias, not news. Consequenes.
*
“Why Is All COVID-19 News Bad News?
November 2020.
…”… The negativity of the U.S. major media is notable even in areas with positive scientific developments including school re-openings and vaccine trials.
“Media negativity is unresponsive to changing trends in new COVID-19 cases or the political leanings of the audience. U.S. major media readers strongly prefer negative stories about COVID-19, and negative stories in general.
“Stories of increasing COVID-19 cases outnumber stories of decreasing cases by a factor of 5.5 even during periods when new cases are declining.
“Among U.S. major media outlets, stories discussing President Donald Trump and hydroxychloroquine are more numerous than all stories combined that cover companies and individual researchers working on COVID-19 vaccines.”
https://www.nber.org/papers/w28110
Pannage, turbary, estovers, and piscary, from “The Theft of the Commons”.
And quoted in above is “The Wall,” John Berger writes, “is the front line of what, long ago, was called the Class War.”, quote and original im Guardian below.
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“The Theft of the Commons
“…I saw a long stone wall on the crest of a cliff. “The Wall,” John Berger writes, “is the front line of what, long ago, was called the Class War.” Walls, fences, hedges, and ditches were all used to mark the boundaries of enclosed land, so that sheep could be kept there, or some other profit could be pursued. Enclosure is how nearly all the agricultural land in Britain came to be owned by less than one per cent of the population. … E. P. Thompson writes that enclosure was “a plain enough case of class robbery, played according to fair rules of property and law laid down by a parliament of property-owners and lawyers.”
…
“An entire legal history is told in the four lines of one anonymous English poem:
“The law locks up the man or woman
Who steals the goose from off the common,
But lets the greater villain loose
Who steals the common from the goose.”
…
https://www.newyorker.com/culture/essay/the-theft-of-the-commons
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And John Berger re The Wall quoted in above article;
…
“The present period of history is one of the Wall. When the Berlin one fell, the prepared plans to build walls everywhere were unrolled. Concrete, bureaucratic, surveillance, security, racist, zone walls. Everywhere the walls separate the desperate poor from those who hope against hope to stay relatively rich. The walls cross every sphere from crop cultivation to healthcare. They exist, too, in the richest metropolises of the world. The Wall is the front line of what, long ago, was called the class war.
“On the one side: every armament conceivable, the dream of no-body-bag wars, the media, plenty, hygiene, many passwords to glamour. On the other: stones, short supplies, feuds, the violence of revenge, rampant illness, an acceptance of death and an on-going preoccupation with surviving one more night – or perhaps one more week – together.
“The choice of meaning in the world today is here between the two sides of the wall.”…
https://www.theguardian.com/artanddesign/2004/may/29/art1
“Social Democratic Capitalism” which includes “estimates of their cost and a set of tax changes that would yield the revenue needed to fund them” by Lane Kenworthy. But – time.
I’d love to see a comment by John Quiggin, rather than ‘Im not an economist but…’ here;
https://statmodeling.stat.columbia.edu/2022/06/11/would-democratic-socialism-be-better/
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Social Democratic Capitalism
By Lane Kenworthy
-Confronts current economic, social, and political challenges, presenting an evidence-based answer to the questions: What policies and institutions work best? Where should we go?
– Examines the superior performance of social democratic capitalism (sometimes called the “Nordic model”) and empirically shows what would happen if it were implemented in other nations
-Provides detailed policy recommendations for the United States, along with estimates of their cost and a set of tax changes that would yield the revenue needed to fund them”
https://global.oup.com/academic/product/social-democratic-capitalism-9780190064112?cc=au&lang=en&
https://lanekenworthy.net/about-me/
Download
Click to access wdsbb-contentsandintro.pdf
KT2,
Thanks for the poem.
“The law locks up the man or woman
Who steals the goose from off the common,
But lets the greater villain loose
Who steals the common from the goose.”
It actually needs a correction as the common is stolen from the people. It is hard to get a good, unforced rhyme. I’ve tried this one.
“The law locks up the man or woman
Who steals the goose from off the common,
But lets the greater villain pillage
And take the common from the village.”
Reinfections… Ikonoclast is on the right track… “but magnitude of T and B cell responses against B.1.1.529 spike protein was reduced.”
… “hybrid-immune-damping.” “responses to itself were reduced”. (Groan). ” It also concurs with observations that mRNA vaccination carrying the B.1.1.529 (Omicron) spike sequence (Omicron third-dose after ancestral sequence prime/boosting) offers no protective advantage ( 31 ).”
Me – triple vax’d..
– 2x AZ + 1x Pfizer
+ infected Omicron B? (probably B1 or 2 and tried twice to get PCR test but told no both times). But no / reduced additional immunity against Sars CoV2 Omicron B1.1.529.
*
“Importantly, while B1.1.529 (Omicron) infection in triple-vaccinated previously uninfected individuals could indeed boost antibody, T cell and MBC responses against other VOC, responses to itself were reduced. This relatively poor immunogenicity against itself may help to explain why frequent B.1.1.529 (Omicron) reinfections with short time intervals between infections are proving a novel feature in this wave. It also concurs with observations that mRNA vaccination carrying the B.1.1.529 (Omicron) spike sequence (Omicron third-dose after ancestral sequence prime/boosting) offers no protective advantage ( 31 ).”
“Immune boosting by B.1.1.529 (Omicron) depends on previous SARS-CoV-2 exposure”
https://www.science.org/doi/10.1126/science.abq1841
Via;
https://www.theguardian.com/world/2022/jun/14/people-who-caught-covid-in-first-wave-get-no-immune-boost-from-omicron
Re Minimum Wage determination today. A primer.
Dr Steven Kennedy PSM Secretary to the Treasury says “we do not see a significant risk of a wage-price spiral”.
The AFR says “The intensification of work doesn’t seem to be making us richer, but it does appear to be making us sicker.”.
Harry, after you have read the Treasury Address and AFR article below, and we get Fair Work Commission minimum wage ruling today, let’s chat.
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The “Post-Budget economic briefing – opportunities and risks” by Dr Steven Kennedy PSM Secretary to the Treasury”, was delivered, not to the 2.5m low wage earners but to;
“Address to the Australian Business Economists” on 8 June 2022.
175 “Australian Business Economists” are making decisions for shareholders not welfare, justice, equity of life etc?
The “Post-Budget economic briefing – opportunities and risks” shows that;
– we are having a faux debate about taxation being around 24.5% to 26% of GDP and
– “we do not see a significant risk of a wage-price spiral”
*
Post-Budget economic briefing – opportunities and risks
Dr Steven Kennedy PSM Secretary to the Treasury
Address to the Australian Business Economists
8 June 2022
…
“With inflation expectations remaining well-anchored, we do not see a significant risk of a wage-price spiral, but policy makers must always remain vigilant.” pg10.
” Second, it can raise additional tax revenues. The larger size of government will need to be balanced against the associated costs, including disincentives associated with some taxes to work or invest. The effects of a larger tax take can be minimised by ensuring the design of the tax system is optimal.
“Personal income tax receipts
The improvement in the budget balance in the medium term relies largely on increases in receipts from personal income taxes (Chart 12).” pg13
…
“in the light of spending pressures and the pressure on income tax arrangements, there seems to be little case to lower taxes elsewhere including company taxes. In fact, in some countries, such as the UK, governments are increasing company taxes and applying tax measures to highly profitable parts of the economy.
The case for maintaining company tax rates is made even more compelling in Australia’s case, where we are experiencing a record level in the terms of trade and the banking sector is highly profitable. The banking and mining sectors made up around 45 per cent of company tax revenue in the 2019-20 income year.”pg14
…
” Ongoing review of the tax base and tax expenditures to ensure the tax system remains adequate to fund spending commitments and is equitable including from an intergenerational perspective will be important given the pressures to raise more revenue over time.”pg15
…
https://treasury.gov.au/speech/address-australian-business-economists-0
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Australian Business Economists “enjoy a range of benefits including:
– functions with access to senior policy makers”
“Membership
“You are invited to join the 175-strong members of Australian Business Economists. ABE members represent a variety of industry sectors including: banking, financial services, government and industry.
“Members enjoy a range of benefits including:
– functions with access to senior policy makers
– function discounts
– networking opportunities
– member-only events https://www.abe.org.au/membership.aspx
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“Why are we all working so hard?
“The intensification of work doesn’t seem to be making us richer, but it does appear to be making us sicker.”
https://www.afr.com/work-and-careers/workplace/why-are-we-all-working-so-hard-20220607-p5artq
Great unrolled thread from Twitter about:
NEOLIBERISM
“Some progressives tend to think of neoliberalism as the disease. For them, all we need to do is go back to a more regulated “pre-neoliberal” form of capitalism. But neoliberalism is not the disease. It is just a symptom of the disease. The disease is capitalism. Here’s why.
First, we need to understand what capitalism actually is. Under capitalism, the purpose of production is NOT primarily to meet human needs. This is no generic economy. Rather, the purpose is to maximize and accumulate profit. That is the core objective.
Toward this end, capital seeks to cheapen inputs—labour and nature—as much as possible. For most of its history, capital brutally exploited workers in the core economies, and relied on imperialism to guarantee a study supply of cheap labour and resources in the global South.
But this arrangement came under threat after WWII. Labour movements in the core succeeded in winning better wages, better working conditions, and a wide-range of public services: healthcare, housing, education, transit…
Meanwhile, in the South, anti-colonial movements overthrew imperialism and began introducing socialist reforms: nationalizing resources, improving wages, building public services, and using tariffs, capital controls and industrial policy to achieve economic sovereignty.
This radical turn dramatically improved the lives of working people, North and South. But the new regime of fair wages and resource prices made capital accumulation in the core increasingly untenable, triggering a crisis for elites in the 1970s.
As it turns out, capitalism cannot function for very long under conditions of worker justice and decolonization. For capitalists in the core, it was clear that something had to change.
The core states faced a choice: either they could accept the fair wages and decolonization, abandon capital accumulation and shift to a post-capitalist economy… *or* they could attack wages and somehow re-impose the imperial arrangement. They opted hardcore for the latter.
At home, they dismantled the unions and shredded public services. They slashed all manner of regulations and protections, in a desperate bid to restore the conditions for capital accumulation. Today we know this as neoliberalism.
Neoliberalism was imposed even more brutally across the South, through structural adjustment programs. They reversed the socialist reforms of the anti-colonial era, cut wages and resource prices, and destroyed economic sovereignty… subordinating Southern economies once again.
This was not some kind of “mistake”. Not just bad theory. Neoliberalism was imposed in order to restore the conditions for capital accumulation. It was an orchestrated backlash against the successes of the labour movement and the anti-colonial movement. This is why, despite 40 years of data on how destructive neoliberal policies are, we are still stuck in this nightmare.
We are stuck because the obvious solution—worker justice, regulation, and economic sovereignty in the South—is inimical to capital accumulation in the core. There is a way out of this nightmare, and that is to abandon capital accumulation as an objective and transition to a post-capitalist economy.
Neoliberalism is just a symptom. If we want to advance we need to deal with the underlying structural problem. We can have a democratic economy organized around meeting human needs at a high standard, where production is socially just and ecologically regenerative. Such a system is possible, but it requires transitioning out of capitalism.” – Jason Hickle
@jasonhickel
Professor at ICTA-UAB and Visiting Senior Fellow at LSE • Author of THE DIVIDE and LESS IS MORE • Global inequality, political economy and ecological economics
5.2%.
Just what we need as US inflation spikes at its highest level for 40 years and as the RBA have already announced further interest rate hikes in 2022. But it’s a “once off” – workers need to be “compensated” for price increases and this compensation argument is valid now but won’t be so in the future. So no risk of a wage-price spiral and the inevitable recession-inducing monetary policy restrictions.
Maybe.
Important short article, IMHO. Really explains things quickly and clearly.
CAPITALISM
“People often assume that capitalism is defined by “markets and trade”. But markets and trade existed for thousands of years before capitalism. Capitalism is only 500 years old. So what is distinctive about this economic system? Three things (well, more, but three for now):
1. First, and most importantly, it is defined by enclosure and artificial scarcity. The origins of capitalism lie in a systematic effort by elites to restrict people’s access to commons and independent subsistence, in order to render them reliant on wage labour for survival.
Over the past 500 years, this has taken the form of privatization of commons, forced dispossession, destruction of subsistence economies and – particularly in the colonies – taxing people in a currency they do not have in order to induce them to seek wages in that currency.
This continues today, with attempts to ensure an artificial scarcity of access to essential goods such as housing, healthcare, education, transit, and so on – goods that could very easily be provided, at high quality, on a universal public basis.
Where universal public goods do exist, these have usually been won by longstanding struggles by labour movements and other progressive forces (including the anti-colonial movement).
2. Second, capitalism is organized around – and dependent on – perpetual expansion, meaning ever-increasing production of commodified goods. It is the only intrinsically expansionary economic system in history (meaning it basically has a crisis if it doesn’t continually expand).
Crucially, under capitalism the purpose of increasing production is *not* primarily to meet human needs, but rather to extract and accumulate profit. That is the overriding objective. (It is also the main objective of innovation).
It’s important to distinguish here between small businesses, which quite often operate with a steady-state, use-value logic (and which obviously preceded capitalism), and corporations whose main objective is expansion and accumulation (which define the capitalist era).
To sustain the process of perpetually increasing surplus accumulation, capital requires an ever-rising quantity of inputs (labour and nature), and requires that these inputs be obtained as cheaply as possible.
This introduces a constant pressure to depress real wages and attack environmental protections wherever possible (in the absence of countervailing political forces). The result is a system that, left to itself, automatically generates inequality and ecological breakdown.
3. Finally, capitalism is notable for precluding democratic decision-making. Even in countries that prize political democracy, democratic principles are rarely allowed to operate in the sphere of production, where decisions are made overwhelmingly by those who control capital.
The result is that decisions about what to produce, for what purposes, for whose benefit, and under what conditions are generally made in the narrow interests of the capitalist class (workers, the people actually *doing* the production, rarely get a voice at all).
It is worth pondering how our production priorities (and our treatment of labour and nature) might be different under conditions of economic democracy. Existing evidence suggests that democratic conditions lead to less exploitation, more equality, and more care for ecology.
In sum, the tendency to equate capitalism with “markets and trade” naturalizes a system that is not natural, and prevents us from having a clear-eyed view of how it operates and how we might want to do things differently.
(The “more” I referred to involves exploitative relations of race, gender and imperial power, which are effects of the tendencies described here, and which sustain them, but this deserves a thread unto itself – coming soon).
We can have a democratic economy organized around meeting human needs at a high standard, where production is socially just and ecologically regenerative. Such a system is possible, but it will require a political movement to bring it into being.” – Jason Hickel.
Jason Hickel is Professor at ICTA-UAB and Visiting Senior Fellow at LSE • Author of THE DIVIDE and LESS IS MORE • Global inequality, political economy and ecological economics.
Note: I am avoiding links at the moment. Link moderation seems heavy which is fine. I grok that.
Harry says “Maybe”.
The head of ACMI said .”..needs to be driven by the market”.
Maybe capital will supplant government and society. That will be called a wage death spiral.
Maybe we can have a US style Health (of profit) care system. And a wage death spiral.
$105.6 billion + $438 billion…
“… universal health care could have saved more than 338,000 lives from COVID-19 alone. The U.S. also could have saved $105.6 billion in health care costs associated with hospitalizations from the disease—on top of the estimated $438 billion that could be saved in a nonpandemic year.
“Health care reform is long overdue in the U.S.,” says the study’s lead author Alison Galvani, director of the Center for Infectious Disease Modeling and Analysis at the Yale School of Public Health. “Americans are needlessly losing lives and money.”
https://www.scientificamerican.com/article/universal-health-care-could-have-saved-more-than-330-000-u-s-lives-during-covid/
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“Universal healthcare as pandemic preparedness: The lives and costs that could have been saved during the COVID-19 pandemic
June 13, 2022
Significance
“The fragmented and inefficient healthcare system in the United States leads to many preventable deaths and unnecessary costs every year. Universal healthcare could have alleviated the mortality caused by a confluence of negative COVID-related factors. Incorporating the demography of the uninsured with age-specific COVID-19 and nonpandemic mortality, we estimated that a single-payer universal healthcare system would have saved 212,000 lives in 2020 alone. We also calculated that US$105.6 billion of medical expenses associated with COVID-19 hospitalization could have been averted by a Medicare for All system.”
https://www.pnas.org/doi/full/10.1073/p
Richard Holden on the 5.2% wage decision: Precis – less people will be on the minimum wage and more will be on unemployment benefits. Don’t share his optimism about inflation possibly falling by 2023 – indeed his own arguments suggest the core difficulties – pressure on wages to compensate for the fall in real wages that will occur over the remainder of 2033:
https://www.afr.com/policy/economy/oversized-pay-rise-is-somebody-else-s-job-20220614-p5ath3
Harry,
You never addressed, so far as I can recall, my questions about profit push inflation nor my questions about supply shock inflation. Then, you never addressed the question of why minimum wage earners should take the whole brunt of inflation fighting when business profits are at record high levels and taxes on the wealthy are at record low levels.
Does the price of barista’s labor really push up energy prices? I don’t think so. Does the price of a maid’s wage rise push up a hotel’s costs? Yes, marginally. Well, the hotel can reduce slightly its, no doubt, outrageous profits.
Your answer to everything is that the working poor must stay working poor to discipline the whole system. Meanwhile you appear unconcerned that the rich make record profits at every level and pay stuff all taxes. A majority of people do not want that world. They want to find a way to make the political economy work for all and not just for a few.
I would hope this is an appropriate place to ask the following questions. Surely I can’t be the only member of the public who still just doesn’t “get” how the electricity market is meant to work?
a. How do fluctuating “spot prices” work? I get the impression that move very quickly, but why?
b. If a power generating company, whether it be privately or publicly owned, says it can’t make profit if the cost of gas or coal is at a certain level, over what time frame are they talking? Businesses can wear a temporary loss if they make enough profit over the rest of the year – who determines whether these companies are being opportunistic when complaining about a temporary loss due to a temporary spike in cost to generate?
c. There was talk about how if AMEO set a price, they would compensate companies for the loss caused. Where does that compensation money come from? And again, who determines what is reasonable compensation, as that surely involves the question of what a reasonable profit is (which raises the question in b.)
d. How do the multitude of “retailers” manage to make a difference in price to customers. I don’t understand what an electricity retailer actually does, and why some should be able to offer significantly different prices to customers.
Of course, meant to type AEMO in the comment above…
Ikonoclast, You confuse positive and normative arguments. Markets don’t guarantee distributive justice as has long been understood. There is a difference between saying that low wage workers are insufficiently paid and saying that policy-makers should increase the wages of these low wage workers by setting minimum wages at higher levels. The reason is that the latter move may have unintentional effects such as (as Richard Holden points out) forcing those on minimum wages onto JobKeeper. Moreover, the authorities cannot set real minimum wages = W/P where W is the dollar value of wages and P is some index of prices. They can certainly set W via tribunal decisions but controlling P is much harder since, in a decentralised economy, prices are determined by firms who will take into account wage costs – as well as demand – when they determine prices. The 5.2% nominal wage increase just awarded will be eroded by inflation over the next year. Don’t forget inflation currently is running at 7% if you measure it correctly. So either one of two things can happen. Either workers repeat the “catch-up” game again next year in which case we are on the path to a destruictive wage-price spiral or they won’t repeat the catch-up game next year in which case the effects of the nominal wage increase will be nullified in terms of rewards but which will trigger job losses in the process.
Wages are a social justice issue but low wages in certain sectors should be addressed by the tax and transfer system (or by cutting the immigration intake or by introducing training schemes) not by awarding high nominal wage increases to sectors of the economy (mainly unskilled or low skilled) that past experience has shown are vulnerable to unemployment. Moreover, these moves distort the role of wages as a price which allocates labour between sectors on the basis of its relative costs – that’s why you want to uncouple arguments about distribution from arguments over efficiency. Everyone wants efficiency – to maximise the size of the total pie. After you have efficient labour markets you can use tax/transfer or labour supply arguments to improve what you think of as a desirable income distribution.
Your point about supply shocks is correct. These are contributing to inflation but that is no argument for shooting yourself in the foot by seeking high nominal wage increases via the minimum wage that will spread through to one quarter of the workforce. Your remarks about profit-push inflation don’t make sense to me.
The difficulty Ikonoclast is that you have moral arguments that prevent you from seeking clearly what will happen in the economy. Your moral position if exercised uncritically will disadvantage those you claim to defend.
stevefrombrisbane, it’ll cost ya!
Going by AEMO boss last night on ABC News, he is unable to explain a, b & c in a digestible manner.
“NEM Basics: short video course
“This short video course gives a high level summary of the National Electricity Market (NEM) and is ideal for anyone new to the energy industry.
“Learning outcomes:
“On completion of this course, participants will have gained a broad overview of the fundamental structure and workings of the NEM.
“Cost:
$30 (plus GST) per person
…
https://aemo.com.au/learn/industry-courses/nem-basics
Re d, bullsh!t jobs.
Wade through;
https://aemo.com.au/sitemap
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Or ignore completely as the market HAS failed and will be replaced.
Ala JQ;
“There are quite a few proposals around to intervene in, or repair, the National Electricity Market. In my view, it’s much too late for that. We need to scrap the NEM and start on a new path towards a zero-carbon electricity and energy system.
…
“Comparison with the NEM
“The existing National Electricity Market is unique to Australia. Wholesale prices are set on the basis of bids for five-minute periods, with a cap of $12,500 per megawatt hour (MWh). Electricity is purchased by retailers who then supply consumers. The consumer price consists of the average wholesale price paid by retailers, the retail margin and a regulated charge for distribution and transmission.”
…
https://johnquiggin.com/2017/09/12/how-to-replace-the-national-electricity-market/
Harry & me… expert, expert shopping & cynical & assisted expert shopping. (^1. Eshop)
Harry, you quote Richard Holden in today’s Fin Review – below. This is termed assisted expert shopping (^1Eshop). Me too, all the time.
And Richard Holden, please tell us how the +23% profit rate last 3mths and +14% mining profits effect inflation. If profits have no effect on inflation, why not? Please detail using JQ’s Lesson 2. Thanks. (^2.)
I’d really appreciate to know specific upcoming metrics of inflationary effect drivers, enabling better understanding of wage decision inflation effect. Maybe! Harry will be proven correct – from a purely economic perspective.
In other words -no expert shopping.
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Experts Richard Holden & John Quiggin have said:
“Economics doesn’t have all the answers. No one knows that better than economists. Dealing with the pandemic requires insights from a range of disciplines. But lazy stereotypes, pitting one profession against another, don’t help.”
John Quiggin, and
Richard Holden
https://newsroom.unsw.edu.au/news/general/why-most-economists-continue-back-lockdowns
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^1. Eshop
“I suspect that, in fact, we all engage in wishful expert shopping more often than we would like to admit. This seems to be particularly true when it comes to controversial policy matters, when each side of the debate tends to rely on its “own” experts and tends to regard the experts on the other side as quacks or shills.
“This situation is made even worse by the fact that we often do not even shop for experts ourselves, but, instead, we rely on what elsewhere I have called assisted expert shopping. That is, we let people or organizations we trust (including news organizations, think tanks, politicians, or political parties) engage in expert shopping on our behalf.
“Citizens of liberal democracies must rely on experts to form warranted opinions on many policy-relevant issues and to assess the effectiveness of the policy proposals of political candidates and parties. If, as I suggested, expert shopping is a widespread phenomenon in the political arena, then this undermines the possibility of the sort of healthy public debate about policy on which the proper functioning of liberal democracies depends. Far from being a marginal phenomenon caused by individual gullibility, expert shopping, thus, has the potential to undermine the very foundations of liberal democracy.”
“Expert Shopping: What is it? Why should we worry about it?
Gabriele Contessa.
Associate Professor of Philosophy at Carleton University in Ottawa, Canada.
http://imperfectcognitions.blogspot.com/2022/06/expert-shopping-what-is-it-why-should.html
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^2
Richard Holden, although he worked for Bain & Co, doesn’t seem to mention capital and profits.
“Oversized pay rise is somebody else’s job
“Make no mistake. Fair Work’s decision will mean more people on JobSeeker and fewer on minimum wage
Richard Holden
…
“…Then, confronted with a huge economic crisis in the form of the pandemic, the RBA bought a huge insurance policy against 15 per cent unemployment and the worst recession in a century.
“The bill for that JobKeeper insurance policy is now coming due. It needs to, and it will, get inflation back in the 2 per cent-3 per cent target band in 2023. But that processes will be difficult, even wrenching.
“And while it plays out, there will be continued downward pressure on real wages. But we must resist the urge for short-term solutions through well-intentioned but irresponsible fiscal policy, or pressure for large wage rises by organised labour. Such moves create widespread collateral damage.
“The Fair Work Commission faced a difficult trade-off, and it struck a reasonable balance in its decision. But the balancing act between cost-of-living on the one hand, and inflation and unemployment on the other will remain acute until well into 2023.”
https://www.afr.com/policy/economy/oversized-pay-rise-is-somebody-else-s-job-20220614-p5ath3
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Richard Holden re Quiggin’s book Ein2L.
“Markets are great, except when they’re not
“John Quiggin’s new book should be compulsory reading for policymakers and commentators”
RICHARD HOLDEN
14 MAY 2019
…
…”Whether it’s the distribution of income, full employment, or protecting the environment, constraints exist.
“But those constraints offer guidance. Quiggin notes, for instance, that “the best way to help poor people, at home and abroad, is to give them money to spend as they see fit, rather than tying assistance to particular goods and services. In other words, it is better to fix the inequitable allocation of property rights in the first place than to fix the resulting market outcome.” Whatever the topic, the framework disciplines and sharpens the policy thinking.
“There is little doubt that Quiggin’s Economics in Two Lessons will be an instant classic and feature on university reading lists around the world. It should also be compulsory reading for policymakers and public commentators, who all too often lack a framework for thinking clearly about the costs and benefits of markets. The good news is that Quiggin has one — and he’s happy to share.”
https://insidestory.org.au/markets-are-great-except-when-theyre-not/
Raina MacIntyre, arguably the foremost Australia expert, and maybe one of the best in the world, as a Physician / Field Epidemiologist (looking at Prevention, detection & response, epidemics, pandemics & bioterrorism; vaccines; masks) has retweeted/tweeted the following, clearly indicating some of her grave concerns about what is happening.
1. “The number of Americans with disabilities is up by about 2 million since before the pandemic. Wonder why that is?” – Justin Fox
2. YES, #LongCovid really is a mass disabling event. – Charlos
“The resulting estimate of the number of 16-and-older Americans with a disability is up by about 2 million since early 2020. It had been rising over the decade before. but not at nearly that fast a pace.” “Long Covid is showing up in the employment data” – Bloomberg.
“More Americans in and out of the workforce are having more trouble remembering and concentrating, a common COVID-19 after affect.
3. What to Know About the Newest, Most Contagious Omicron Subvariants – Raina MacIntyre.
https://time.com/6187762/ba-4-ba-5-omicron-subvariants-symptoms-risk/
(They can bypass immunity from vaccination or past infections, experts say.)
The above is not some doom-ist crank down the road (me, if you like) asserting this stuff. This is coming from highly reputably economic, medical and pathology scholars, studies and journals. The relevant top economists and scientists are clearly very worried about it.
We ignore this mass excess deaths and mass disabling event at our grave peril. The trends indicate far, far worse is yet to come unless we get R0 consistently below 1. We have to use all possible methods. Like a sinking ship, this an all hands to all pumps (all reduction methods) emergency. Make no mistake, it is a global emergency, which if not acted upon with every means possible, will lead to ever-widening disaster.
The COVID-19 situation becomes ever more complex.
https://www.theguardian.com/world/2022/jun/14/people-who-caught-covid-in-first-wave-get-no-immune-boost-from-omicron?CMP=Share_iOSApp_Other
Lots of takeaway messages in this report. Some main ones:
(1) People who caught Covid during the first wave of the pandemic get no boost to their immune response if they subsequently catch Omicron, a study of triple vaccinated people reports.
(2) … an Omicron infection offered little extra protection against catching the variant again. “When Omicron started flying around the country, people kept saying that’s OK, that will improve people’s immunity,” said Boyton. “What we’re saying is it’s not a good booster of immunity.”
(3) … previous infections also mattered. Among other findings the team reported infection with Omicron increased protection against future infection with other variants. However, it only offered a limited boost to protection against another Omicron infection – a response that was actually weakened among those who had also previously had the original strain of the virus.
(4) Prof Danny Altmann, another author of the study, said that while it had previously been thought Covid variants such as Omicron had developed mutations in their spike protein that helped them to evade immune responses, the situation was more complex.
“It’s actually worse than that, because the adaptations that the spike [protein] has now are actually inducing a kind of regulation or shutdown of immune response,” he said, adding that while the study looked at responses to the BA.1, similar findings were likely for other subvariants of Omicron.
(5) Altmann said that while the continued low levels of hospitalisation and deaths from Covid in the UK, despite high levels of infection, suggested Covid jabs continued to offer protection against death and severe disease, the findings could be important for the development of new vaccines.
(6) But he added the findings raised other concerns. “We’re not getting herd immunity, we’re not building up protective immunity to Omicron,” he said. “So we face not coming out the other end of infections and re-infections and breakthrough infections.”
End of Quotes.
This is cutting edge science about an extremely complex, new and mutable virus. There are few certainties yet. But so far the trend has been to infections and re-infections and breakthrough infections. Deaths have been much reduced by the vaccines so far (from a previous completely unacceptable rate). Given these new findings it is sensible to ask if that will continue to be the case. Re-infections and breakthrough infections continue to build. In Australia, at least, the situation is persistent death rates from COVID-19 (despite the semi-efficacy of the vaccines) which make COVID-19 vie, with heart attacks, for the position of number one killer of Australians and with no discernible end in sight.
The issue of long covid is a sleeper. It seems to hit over 50% of people who catch COVID-19, vaccinated or not. How much of that is just 2 or 3 months of unpleasantness and inconvenience and how much will become long-term difficulties and disablement?
With all these concerns a cautious approach of getting R0 below 1, and generally keeping it there, would seem a sensible approach. We should support Vaccines Plus as per Raina MacIntyre’s model.
Lt Fred, having just 10mins ago being told by a 30yr veteran within the health system “long covid will be a strain on the health system fir a long time to come”, perhaos you may find evidence to rebut Raina MacIntyre, and put accusations in the sand pit.
As to prove your point in “that thread”, your proof was early, small, and specific.
Post a link here to your sandpit posts. Because when you check your proof mire might appear within 1,000 years.
“a greater concern today may be the threat of a “profit-price” spiral.” Klien quoted in article below.
(as flagged by Ikon & I)
Inflation paper by Servaas Storm:
Y Smith says “this tour de force by Servaas Storm give a far more comprehensive and data-driven take-down than I could ever hope to undertake.”
From:
“What Is Really Causing Our Inflation: “Inflation in a Time of Corona and War”
“I was going to take a stab at writing a post on the drivers of our current inflation, since contrary to a lot of conventional wisdom, the main causes are various forms of damage done by Covid that resulted in a marked fall in the productive capacity of the economy, then turbo-charged by sanctions blowback raising commodities prices. However, this tour de force by Servaas Storm give a far more comprehensive and data-driven take-down than I could ever hope to undertake.”
https://www.nakedcapitalism.com/2022/06/what-is-really-causing-our-inflation-inflation-in-a-time-of-corona-and-war.html
Comments? It will take me 3 days to read and absorb.
JQ, a post FWC wage decision “power, inflation & taxation” thread.
I’ve deleted a bunch of comments from Lt Fred, and will delete replies when I get a free moment.
Suppose Russia wins this war one way or another, what is there to gain from it? The way Russia is fighting, everything conquered is just flat earth and destroyed buildings.
hix,
Correct. John Quiggin and theorists of the intersection of expeditionary/imperial war and its spoils (both senses of the word) have covered this.
My spin is as follows. Acquiring territory is no longer useful for acquiring population (as vassals) and land for primary production. Modern war is total war, extensive war, and destroys what it would take; especially the complexity and interconnectedness of modern populations and infrastructures with all their attendant constructive capacities.
But scorched earth could make the remaining power more powerful relatively, though not absolutely. However, again in an interconnected world, this is almost certainly not going to work. Limited autarky is fine. I am a bit of an autarky fan myself. But total autarky is not going to work unless maybe the nation has at least 250 million people and access to all needed resources within its own boundaries. Globally, only the USA fits this bill but it still performs better being not autarkic. Actually, it’s every exploitative but that’s another post.
Make no mistake, Putin’s war will drag Russia back into the dark ages, if not further.
Putin’s derangement has made all things Russian odious, repulsive and worthless.
Under Putin’s leadership Russia has lost all credibilty, it’s a lawless state run by terrorists.
rog,
I agree. Until Russians stop following Putin they have no worthwhile future. They have to oust Putin, return to the lines before they started the war and start trying to fix their own country.
One could say the last of another superpower. USA needs to look at itself and fix its own country. USA has enormous internal problems.